Although the U.S. Department of Health & Human Services issued a 3 percent increase in Medicare Advantage payment rates a few weeks ago, UnitedHealth is reassessing its outlook for the program.
The chief executive of UnitedHealth, the country's largest provider of Medicare Advantage plans, said the company may have to cut benefits, change provider networks or exit some markets to ensure its Medicare Advantage plans remain profitable.
That's because UnitedHealth is preparing for more cuts next year – as much as 4 percent – in the Medicare Advantage program, which UnitedHealth CEO Stephen Hemsley called "significantly underfunded" during a conference call Thursday, Fox Business reported.
"We did not expect the fastest-growing, most popular and most effective of the Medicare benefit options serving America's seniors would be underfunded to this extent in 2014," he added, reported Bloomberg.
Consequently, the forecasted cuts "will cause UnitedHealthcare to reduce benefits and pull back access in certain markets and will affect the growth prospects and earnings potential for our overall Medicare Advantage offerings across all our markets for 2014," Hemsley said.
His comments came amid UnitedHealth's report of its first-quarter earnings, which sank 14 percent to $1.19 billion, compared with last year's $1.39 billion, according to the Associated Press.